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EXHIBIT 10.8
SERIES A-1 PREFERRED STOCK AND COMMON STOCK
INVESTMENT AGREEMENT
DATED DECEMBER 30, 1998
AND EFFECTIVE AS OF NOVEMBER 23, 1998
BETWEEN
ALLIED RISER COMMUNICATIONS HOLDINGS, INC.
AND
NORWEST VENTURE PARTNERS VII, L.P.
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TABLE OF CONTENTS
SECTION 1.
AUTHORIZATION AND CLOSING.
A. Authorization of the Series A-1 Preferred and the Common Stock.............1
B. Purchase and Sale of the Series A-1 Preferred and the Common Stock.........1
C. The Closing. ..............................................................1
SECTION 2.
CLOSING CONDITIONS
A. Representations and Warranties; Covenants..................................2
B. Certificate of Incorporation...............................................2
C. Bylaws.....................................................................2
D. Subsidiary Organizational Documents........................................2
E. Reorganization.............................................................2
F. Indemnification Agreement and Stockholders' Pledge Agreement. .............2
G. Registration Rights Agreement..............................................2
H. Stockholders' Agreement....................................................2
I. Employment Agreements and Subscription Agreements..........................3
J. Securities Law Compliance..................................................3
K. Authorization and Reservation of Common Stock............................. 3
L. Authorization and Reservation of Company Preferred.........................3
M. Sale of Company Preferred and Common Stock.................................3
N. Opinion of The Company's Counsel...........................................3
O. Repayment of Funded Debt...................................................3
P. Concurrent Purchases.......................................................4
Q. Certain Operating Agreements. .............................................4
R. Warrants...................................................................4
S. Board Composition..........................................................4
T. Second Round Documents ....................................................4
U. Closing Documents .........................................................4
V. Proceedings................................................................5
W. Waiver.....................................................................5
SECTION 3.
COVENANTS.
A. Financial Statements and Other Information.................................5
B. Inspection of Property.....................................................8
C. Attendance at Board Meetings.............................................. 8
D. Use of Proceeds............................................................9
E. Negative Covenants. .......................................................9
F. Affirmative Covenants. ...................................................12
G. Intellectual Property Rights..............................................13
H. Current Public Information................................................13
I. FIRPTA....................................................................13
J. Certain Preemptive Rights.................................................14
K. Authorized and Reserved Common Stock and Company Preferred................15
L. Designation of Directors..................................................15
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SECTION 4.
TRANSFER OF RESTRICTED SECURITIES.
A. General Provisions........................................................15
B. Rule 144A.................................................................15
C. Legend Removal............................................................15
SECTION 5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
A. Organization and Corporate Power..........................................16
B. Capital Stock and Related Matters.........................................16
C. Subsidiaries..............................................................17
D. Authorization; No Breach..................................................17
E. Assets....................................................................17
F. Other Representations, Warranties, Covenants and Deliveries...............17
G. Closing Date..............................................................18
SECTION 6.
DEFINITIONS.
A. Definitions...............................................................18
SECTION 7.
MISCELLANEOUS.
A. Expenses..................................................................21
B. Remedies..................................................................21
C. Purchaser Representations.................................................21
D. Consent to Amendments.....................................................22
E. Survival of Representations and Warranties................................22
F. Successors and Assigns. ..................................................22
G. Severability..............................................................23
H. Counterparts..............................................................23
I. Descriptive Headings; Interpretation. ....................................23
J. Governing Law.............................................................23
K. Notices...................................................................23
L. Understanding Among the Purchasers........................................24
M. Integration...............................................................24
N. Capital and Surplus; Special Reserves.....................................24
O. Treatment of Company Preferred............................................24
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LIST OF EXHIBITS
Exhibit A -Concurrent Purchases
Exhibit B -Allied Riser Communications Holdings, Inc. Certificate of
Incorporation
Exhibit C - Allied Riser Communications Holdings, Inc. Bylaws
Exhibit D - Allied Riser Communications, Inc. Organizational Documents
Exhibit E -Indemnification Agreement and Stockholders' Pledge Agreement
Exhibit F -Registration Rights Agreement
Exhibit G -Stockholders' Agreement and Amendment No. 1 and Joinder Thereto
Exhibit H -Three Forms of Employment Agreements, and Schedule of Necessary
Signatories (Specifying the Applicable Form), and Specifying Certain
Terms Thereof; and Four forms of Subscription Agreement, Amendment
No. 1 and Amendment No. 2 Thereto, and Schedule of Necessary
Signatories (Specifying Applicable Form)
Exhibit I -Opinions of Allied Riser Communications Holdings, Inc. Counsel
Exhibit J -Allied Riser Communications Holdings, Inc. Officers' Certificate
Exhibit K -Joinder to Indemnification Agreement, Waiver and Consent, and
Amendment No. 2 and Joinder to Stockholders' Agreement and First
Amendment to Registration Rights Agreement
Exhibit L -Material Differences Between Forms of Investment Agreements
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ALLIED RISER COMMUNICATIONS HOLDINGS, INC.
SERIES A-1 PREFERRED STOCK AND COMMON STOCK INVESTMENT AGREEMENT
THIS AGREEMENT is made December 30, 1998 and effective as of
November 23, 1998, between Allied Riser Communications Holdings, Inc., a
Delaware corporation (the "Company"), and Norwest Venture Partners VII, L.P.
("Purchaser"). Except as otherwise indicated herein, capitalized terms used
herein have the meanings ascribed to such terms in Section 6 hereof.
The parties hereto agree as follows:
SECTION 1. AUTHORIZATION AND CLOSING.
A. Authorization of the Series A-1 Preferred and the Common
Stock. The Company has authorized the issuance and sale (i) to the Purchaser of
15 shares of the Company's Series A-1 Preferred Stock ("Series A-1
Preferred"), and 65,619,675 shares of the Company's Common Stock, par value
$0.0001 per share ("Common Stock"), and (ii) to the other Persons identified on
Exhibit A attached hereto (the "Concurrent Purchasers"), that number of shares
of Common Stock and Series A-1 Preferred (all such Series A-1 Preferred and
Company Series A-2 Preferred, and all such additional Series A-1 Preferred and
Series A-2 Preferred as may be issued from time to time being hereinafter
referred to collectively as the "Company Preferred") as is set forth on such
Exhibit A, in each such case with respect to Concurrent Purchases, for the
consideration set forth on such Exhibit, and having the rights and preferences
set forth in Exhibit B attached hereto.
B. Purchase and Sale of the Series A-1 Preferred and the
Common Stock. At the Closing, the Company shall sell to the Purchaser and,
subject to the terms and conditions set forth herein, the Purchaser shall
purchase from the Company (i) the number of shares of Series A-1 Preferred for
the consideration set forth on Exhibit A, and (ii) the number of shares of
Common Stock for the consideration set forth on Exhibit A.
C. The Closing. The closing of the purchase and sale of the
Series A-1 Preferred and the Common Stock to Purchaser (the "Closing") shall
take place at the offices of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at 10:00 a.m. (local time) on December 30,
1998, and effective as of November 23, 1993 (the "Effective Date"), or at such
other place or on such other date as may be mutually agreeable to the Company,
the Purchaser and the Concurrent Purchasers, it being agreed and acknowledged by
the parties hereto that the Company and each Concurrent Purchaser desires to
cause the Closing to occur as soon as is reasonably practicable following the
satisfaction or waiver of the respective Closing Conditions. At the Closing, the
Company shall deliver to the Purchaser stock certificates evidencing the Series
A-1 Preferred and the Common Stock to be purchased by the Purchaser, in each
case, registered in the Purchaser's or its nominee's name, upon payment of the
purchase price thereof by wire transfer of immediately available funds to a bank
account of the Company designated by the Company to the Purchaser prior to
Closing.
SECTION 2. CLOSING CONDITIONS. The obligation of the Purchaser
to purchase and pay for the Series A-1 Preferred and the Common Stock at the
Closing is subject to the satisfaction as of the Closing of each of the
following conditions in this Section 2:
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A. Representations and Warranties; Covenants. The
representations and warranties contained in Section 5 hereof shall be true and
correct at and as of the Effective Date as though then made and the Company
shall have performed in all respects all of the covenants required to be
performed by it hereunder prior to the Closing.
B. Certificate of Incorporation. The Company's Certificate of
Incorporation (the "Certificate of Incorporation") shall be as set forth in
Exhibit B hereto, and shall be in full force and effect under the laws of the
State of Delaware as of the Closing.
C. Bylaws. The Company's bylaws shall be in the form of
Exhibit C attached hereto, (the "Company Bylaws") and shall be in full force and
effect under the laws of the State of Delaware as of the Closing.
D. Subsidiary Organizational Documents. The certificate of
incorporation and bylaws of Allied Riser Communications, Inc., a wholly-owned
subsidiary of the Company incorporated and existing under the laws of the State
of Delaware ("New ARC"), shall be as set forth in Exhibit D hereto, and shall be
in full force and effect under the laws of the State of Delaware as of the
Closing (the "Subsidiary Organizational Documents").
E. Reorganization. The Reorganization (i) shall have been
completed (excluding completion of the RCH Liquidation (as defined in the
Indemnification Agreement)), in accordance with all federal, Texas, Delaware,
California, Indiana and other applicable laws, and (ii) shall have been approved
unanimously by the board of directors and by the shareholders of RCH Holdings,
Inc. at a duly noticed and convened special meeting of shareholders, and, to the
extent necessary or desirable, the board of directors and shareholder of each
Former Subsidiary. No Person shall have commenced exercise of appraisal or
similar rights with respect to the Reorganization, or, to the best knowledge of
the Company and its officers after due inquiry, threatened to exercise such
rights (other than any such threats or exercises as have been affirmatively
withdrawn in writing, with copies of such withdrawals having been provided to
Purchaser). All governmental and third party consents necessary in connection
with the Reorganization, the transactions contemplated hereby and in connection
with the Concurrent Purchases, shall have been properly obtained in writing or
proper provision made therefor, all to the satisfaction of Purchaser, and no
litigation shall have been commenced in respect of any such transaction, and to
the best knowledge of the Company and its officers after due inquiry, threatened
in connection therewith.
F. Indemnification Agreement and Stockholders' Pledge
Agreement. The Indemnification Agreement and Stockholders' Pledge Agreement in
the forms attached hereto as Exhibit E (including the Collateral, as defined
therein), shall have been executed and delivered by each of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and such agreements
shall be in full force and effect as of the Closing.
G. Registration Rights Agreement. The Company and each
Concurrent Purchaser shall have entered into and delivered a registration rights
agreement in the form of Exhibit F attached hereto (including the applicable
Current Modification Agreement, the "Registration Rights Agreement"), and the
Registration Rights Agreement shall be in full force and effect as of the
Closing.
H. Stockholders' Agreement. The Company, each Concurrent
Purchaser, and each of the Company's other stockholders (including the spouse of
any such stockholder residing or previously residing in a community property
state) who shall have received or who
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shall be purchasing and receiving Common Stock on the date of this Agreement,
shall have entered into and delivered a stockholders' agreement in the form of
Exhibit G attached hereto (the "Stockholders' Agreement"), and the Stockholders'
Agreement shall be in full force and effect as of the Closing.
I. Employment Agreements and Subscription Agreements. (x) New
ARC shall have entered into the employment agreements as set forth on, and in
accordance with the terms of, Exhibit H attached hereto, with each of the other
applicable parties thereto (collectively, the "Employment Agreements"), (y) each
Person who shall have received or who shall be purchasing and receiving Common
Stock on or after the date of this Agreement pursuant to the RCH Liquidation (as
defined in the Indemnification Agreement) shall have executed the appropriate
form of Subscription Agreement (as amended in a manner satisfactory to the
Purchaser through the date of acceptance by the Company, the "Subscription
Agreements") as set forth on and in accordance with the terms of Exhibit H
attached hereto, and each such subscription shall have been accepted by RCH
Holdings, and (z) each such Employment Agreement and Subscription Agreement
shall be in full force and effect as of the Closing.
J. Securities Law Compliance. The Company shall have made all
filings under all applicable federal and state securities laws and obtained all
approvals and satisfied all temporal notice requirements, in each case,
necessary to consummate the issuance of the Company Preferred and the Common
Stock pursuant to the terms of this Agreement in compliance with such laws and
as necessary and desirable to issue and distribute all other securities in
connection with the Reorganization.
K. Authorization and Reservation of Common Stock. The Company
shall have duly authorized and reserved for issuance, a number of shares of
Common Stock sufficient in Purchaser's opinion, to accommodate shares issuable
in connection with the exercise of Company stock options and the conversion of
Series A-1 and Series A-2 Preferred (including future issuances in subsequent
financing transactions and issuances in respect of dividends on Company
Preferred payable in Company Preferred).
L. Authorization and Reservation of Company Preferred. The
Company shall have duly authorized and reserved for issuance, a number of shares
of Series A-1 Preferred and A-2 Preferred sufficient in Purchaser's opinion, to
accommodate future financing transactions and dividends on Company Preferred
payable in the form of Company Preferred.
M. Sale of Company Preferred and Common Stock. The Company
shall have simultaneously sold to each Concurrent Purchaser the Preferred Stock
and Common Stock to be purchased by or on behalf of such Persons identified on
Exhibit A attached hereto at the Closing and shall have received payment
therefor in full in accordance therewith.
N. Opinion of The Company's Counsel. The Purchaser shall have
received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., counsel for the Company, (i) an opinion
with respect to the matters set forth in Exhibit I attached hereto (which
opinion may rely as to factual matters on certificates of other Persons), and
(ii) the opinion referred to in Section 4.1(a)(i) of the Asset Transfer
Agreement, in each case, addressed to the Purchaser, dated the date of the
Closing, and in form and substance reasonably satisfactory to Purchaser and its
counsel.
O. Repayment of Funded Debt. The Company shall have caused
S.Z. Investments, L.L.C., to be repaid in full, or shall have made adequate
provision for the prompt
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repayment of, all amounts owing in respect of the Credit Agreement (as defined
in the Asset Transfer Agreement).
P. Concurrent Purchases. The final forms of the Investment
Agreements of each Concurrent Purchaser shall be in form and substance
reasonably satisfactory to Purchaser.
Q. Certain Operating Agreements. The Company or a predecessor
to the Company, shall have entered into and provided the Purchaser with true,
correct and fully executed copies of, each of the EOPT Agreements, and each such
agreement shall (i) be in full force and effect in accordance with the terms
thereof, and (ii) to the extent necessary or desirable, be assignable to New
ARC.
R. Warrants. All rights of Advest, Inc., ▇▇. ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇ ▇▇▇▇▇▇ otherwise entitling any such Person to
(a) equity or the contractual right to receive equity, consideration based on
the value of equity of the Company or any Company Affiliate or predecessor, or
(b) consideration in respect of the investment by any other Person in the debt
or equity of the Company, any Company Affiliate or in respect of any similar
transaction or any "finders" fee shall have been extinguished to the
satisfaction of Purchaser and written evidence satisfactory to Purchaser shall
have been provided to Purchaser.
S. Board Composition. The Purchaser's designee(s) to the
Company's board of directors, if any, shall be elected simultaneously with the
Closing, and the New ARC board of directors shall have been reconstituted in a
manner complying with the Stockholders' Agreement.
T. Second Round Documents. The appropriate parties shall have
executed and delivered the Current Modification Agreements.
U. Closing Documents. The Company shall have delivered or
caused to be delivered to the Purchaser all of the following documents:
(i) an Officers' Certificate, dated the date of the
Closing, stating that the conditions specified in Section 1 and
Sections 2.A through 2.V, inclusive, have been fully satisfied;
(ii) certified copies (a) of the resolutions duly
adopted by the Company's board of directors authorizing the execution,
delivery and performance of this Agreement and each of the other
agreements contemplated hereby, the filing and effectiveness of the
Certificate of Incorporation, the issuance and sale of the Series A-1
Preferred, the Series A-2 Preferred, the issuance of the Common Stock,
the reservation for issuance of Company Preferred and Common Stock
meeting the standards set forth in Sections 2.K and 2.L above, and the
consummation of all other transactions (including the Concurrent
Purchases and the Reorganization Transactions (excluding completion of
the RCH Liquidation)) to which the Company and/or New ARC is a party
and contemplated by this Agreement, and (b) documentation evidencing
the unanimous board and shareholder approvals referred to in Section
2.E above;
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(iii) certified copies of the Certificate of
Incorporation, Company Bylaws and New ARC Organizational Documents, in
each case, as in effect at the Closing;
(iv) fully executed copies of each of the Employment
Agreements and Subscription Agreements, as in effect at the Closing;
(v) copies of all consents and approvals of each
Person required to consummate the Reorganization Transactions, the
transactions contemplated hereunder, and in connection with each of the
Concurrent Purchases;
(vi) certificates representing the Common Stock and
Series A -1 Preferred Stock to be issued to the Purchaser in accordance
with Section 1.B hereof, registered in the Purchaser's or its nominee's
name;
(vii) copies of the Asset Transfer Agreement and
Liquidation Documents, Indemnification Agreement, and Stockholders'
Pledge Agreement (including all certificates representing the initial
collateral thereunder in accordance with the terms thereof), in each
case, in full force and effect;
(viii) satisfactory documentation regarding the
matters identified in Section 2.R above;
(ix) the legal opinions referred to in Section 2.N;
(x) fully executed copies of each agreement referred
to in Section 2.Q above, accompanied by consents to assignment, where
appropriate or necessary, in each case in full force and effect; and
(xi) such other documents relating to the
transactions contemplated by this Agreement (including the Concurrent
Purchases), and the Reorganization, as Purchaser or its counsel may
request.
V. Proceedings. All corporate and other proceedings taken or
required to be taken by the Company and any other Person (including New ARC) in
connection with the transactions contemplated hereby, by the Reorganization
Transactions and in the Concurrent Purchases transaction documents to be
consummated at or prior to the Closing and all documents incident thereto shall
be reasonably satisfactory in form and substance to Purchaser and its counsel.
W. Waiver. Any condition specified in this Section 2 may be
waived by the Purchaser; provided that no such waiver shall be effective against
any such Person unless it is explicitly set forth in a writing executed by such
Person.
SECTION 3. COVENANTS.
A. Financial Statements and Other Information. The Company
shall deliver to Purchaser, so long as Purchaser and/or its Affiliates own three
(3) or more shares of Company Preferred or 5% or more of the issued and
outstanding Common Stock (such Purchaser being a "Qualifying Holder"):
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(i) as soon as available but in any event within 30
days after the end of each monthly accounting period in each fiscal
year, unaudited consolidating and consolidated statements of income and
cash flows of the Company and its Subsidiaries for such monthly period
and for the period from the beginning of the fiscal year to the end of
such month, and unaudited consolidating and consolidated balance sheets
of the Company and its Subsidiaries as of the end of such monthly
period, setting forth in each case comparisons to the Company's annual
budget (beginning in fiscal 1999), and to the corresponding period in
the preceding fiscal year (which, for fiscal year 1999, shall be a
comparison to the Company's projections for fiscal 1999), and all such
statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied, and shall be certified by
the Company's chief financial officer;
(ii) as soon as available but in any event within 45
days after the end of each quarterly accounting period in each fiscal
year, unaudited consolidating and consolidated statements of income and
cash flows of the Company and its Subsidiaries for such quarterly
period and for the period from the beginning of the fiscal year to the
end of such quarter, and consolidated balance sheets of the Company and
its subsidiaries as of the end of such quarterly period, setting forth
in each case comparisons to the annual budget and to the corresponding
period in the preceding fiscal year, and all such statements shall be
prepared in accordance with generally accepted accounting principles,
consistently applied, and shall be certified by the Company's chief
financial officer;
(iii) within 90 days after the end of each fiscal
year, audited consolidating and consolidated statements of income and
cash flows of the Company and its Subsidiaries for such fiscal year,
and consolidating and consolidated balance sheets of the Company and
its Subsidiaries as of the end of such fiscal year, setting forth in
each case comparisons to the Company's annual budget (beginning in
fiscal 1999),and to the preceding fiscal year, all prepared in
accordance with generally accepted accounting principles, consistently
applied, and accompanied by (a) with respect to the consolidated
portions of such statements (and not with respect to budgets and/or
projections), an unqualified opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or such
other independent accounting firm of recognized national standing
approved by the Company's board of directors, (b) a certificate from
such accounting firm, addressed to the Company's board of directors,
stating that in the course of its examination nothing came to its
attention that caused it to believe that there was any default by the
Company or any Subsidiaries in the fulfillment of or compliance with
any of the terms, covenants, provisions or conditions of any material
agreement to which the Company or any Subsidiaries is a party or, if
such accountants have reason to believe any default by the Company or
any Subsidiaries exists, a certificate specifying the nature and period
of existence thereof, and (c) a copy of such firm's annual management
letter to the board of directors;
(iv) promptly upon receipt thereof, any additional
reports, management letters or other detailed information concerning
significant aspects of the Company's operations or financial affairs
given to the Company by its independent accounts (and not otherwise
contained in other materials provided hereunder);
(v) at least 45 days (but not more than 90 days)
prior to the beginning of each fiscal year, beginning in the fourth
quarter of fiscal 1999, a budget plan (and in the case of fiscal year
1999, on December 1, 1998, a draft budget plan), including a
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timetable of key events, will have been submitted to the Company's
board of directors for approval for the preparation of annual budgeted
statements of income and cash flows and budgeted balance sheets, which
budgeted financial statements will have been submitted to the Company's
board of directors for approval prior to the beginning of such fiscal
year and will have been approved by the Company's board of directors
prior to the thirtieth day of such fiscal year, prepared on a monthly
basis for the Company and its Subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flows and balance
sheets), and promptly upon preparation thereof any other significant
budgets prepared by or on behalf of the Company and any revisions of
such annual or other budget (each of which shall be reviewed and
approved by the Company's board of directors);
(vi) promptly (but in any event within five (5)
business days) after the discovery by an executive officer of the
Company, or receipt of notice by the Company, of any default under any
material agreement to which the Company or any of its Subsidiaries is a
party or any other material adverse change, event or circumstance
affecting the Company or any Company Subsidiary (including, without
limitation, the filing of any material litigation against the Company
or any Company Subsidiary or the existence of any dispute with any
Person which involves a reasonable likelihood of such litigation being
commenced), an Officer's Certificate specifying the nature and period
of existence thereof and what actions the Company and its Subsidiaries
have taken and propose to take with respect thereto;
(vii) within ten (10) days after transmission
thereof, copies of all registration statements and all regular, special
or periodic reports which it files, or any of its officers or directors
file with respect to the Company or any Company Subsidiary, with the
Securities and Exchange Commission or with any securities exchange on
which any of its securities are then listed, and copies of all press
releases and other statements made available generally by the Company
or any Subsidiary to the public concerning material developments in the
Company's and its Subsidiaries' businesses; and
(viii) with reasonable promptness, such other
information and financial data concerning the Company or its
Subsidiaries as any Qualifying Holder may reasonably request.
Each of the financial statements referred to in this Section A shall fairly
present the financial condition and results of operations of the Company and its
Subsidiaries as of the dates thereof and for the periods reflected therein and
shall be true and correct in all material respects, subject in the case of the
unaudited financial statements to changes resulting from normal year-end
adjustments (consistent in nature and amount with past practice) for recurring
accruals (none of which would, individually or in the aggregate, be materially
adverse to the financial condition, operating results, assets, operations or
business prospects of the Company and its Subsidiaries taken as a whole) and
lack of footnotes.
Notwithstanding the foregoing, the provisions of this Section A shall cease to
be effective so long as the Company (a) is subject to the periodic reporting
requirements of the Securities Exchange Act and continues to comply with such
requirements, and (b) promptly provides to each Person otherwise entitled to
receive information pursuant to this Section A all reports and other materials
filed by the Company and each Subsidiary with the Securities and Exchange
Commission pursuant to the periodic reporting requirements of the Securities
Exchange Act; provided that so long as any Company Preferred remains
outstanding, the Company shall
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continue to deliver to each Qualifying Holder, the information specified in
Sections A(v) and A(vi) above, and copies of all press releases and other
statements made available generally by the Company or any Company Subsidiary to
the public concerning material developments in the Company's and its
Subsidiaries' businesses.
Except as otherwise required by law or judicial order or decree or by any
governmental agency or authority, each Person entitled to receive information
regarding the Company and its Subsidiaries under Sections 3.A, 3.B and 3.C shall
use its best efforts to maintain the confidentiality of all nonpublic
information obtained by it hereunder which the Company has designated in writing
as proprietary or confidential in nature (at the time such information is
provided, or, in the case of oral disclosures, orally identified as confidential
at the time of disclosure and designated in writing as such within 30 days after
such oral disclosure), provided that each such Person (i) may, to the extent
required by law, disclose such information in connection with the sale or
transfer or proposed sale or transfer of any Company Preferred or Common Stock
if such Person's transferee agrees in writing to be bound by the provisions
hereof, and (ii) may disclose such information to any partner, subsidiary, or
Affiliate of such Person or to officers, directors or employees of the foregoing
(provided that such Persons are bound by confidentiality provisions similar to
those described herein) for the purpose of evaluating its investment in the
Company so long as such Person is advised of the confidential nature of the
information.
If Purchaser is requested to disclose any of the confidential information, and
Purchaser is advised by counsel that it must disclose such information or else
stand liable for contempt or other penalty or censure, Purchaser will promptly
notify the Company of such request so that the Company may seek a protective
order or other appropriate remedy. Purchaser agrees to cooperate with the
Company, at the Company's expense, in its efforts to obtain such remedies, but
this provision will not be construed to require Purchaser to undertake
litigation or other legal proceedings. If such protective order or other remedy
is not promptly obtained, any information that is required to be disclosed may
be disclosed by Purchaser pursuant to the advice of counsel.
For purposes of this Agreement, "confidential information" shall not include (i)
information that becomes publicly available (other than as a result of breach of
this Section 3.A), (ii) any information which Purchaser is required to disclose
under applicable law or regulation, including any regulation applying to any
stock exchange in which it or its Affiliates' shares are listed, or as a result
of an order or request of any competent jurisdiction, governmental or other
authority, or (iii) any information that the Purchaser can demonstrate was
legally already in its possession prior to the Purchaser's receipt of such
information from another party or the Company.
B. Inspection of Property. The Company shall permit any
representatives designated by Purchaser, so long as Purchaser is a Qualifying
Holder, upon reasonable notice and during normal business hours, to (i) visit
and inspect any of the properties of the Company and its Subsidiaries, (ii)
examine the corporate and financial records of the Company or its Subsidiaries
and make copies thereof or extracts therefrom and (iii) discuss the affairs,
finances and accounts of any such Person with the directors, officers, key
employees and independent accountants of the Company and its Subsidiaries.
C. Attendance at Board Meetings. So long as Purchaser is a
Qualifying Holder, the Company shall give Purchaser written notice of each
meeting of its board of directors and each committee thereof (or the board of
directors of any such committee of any Company Subsidiary) at least three (3)
business days prior to the date of each such meeting,
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and the Company or such Subsidiary as applicable, shall permit a representative
of each such Person not otherwise represented on the board or such committee to
attend as an observer all meetings of its board of directors and all committees
thereof; provided that in the case of telephonic meetings conducted in
accordance with the Company's or such Company Subsidiary's bylaws and applicable
law, each such Person need receive only actual notice thereof at least 48 hours
prior to any such meeting, and each such Person's representative shall be given
the opportunity to listen to such telephonic meetings. Each representative shall
be entitled to receive all written materials and other information (including,
without limitation, copies of meeting minutes) given to directors in connection
with such meetings at the same time such materials and information are given to
the directors. If the Company proposes to take any action by written consent in
lieu of a meeting of its board of directors or of any committee thereof, the
Company shall give written notice thereof to each such Person prior to the
effective date of such consent describing in reasonable detail the nature and
substance of such action. Notwithstanding the foregoing, the board of directors
may, in its discretion and under special circumstances as determined by the
board, direct that no such notice, right to attend or right to receive materials
be honored, in which case, the Company shall have no liability to the Purchaser
(in its capacity as such) for any failure to give any such notice, permit such
attendance, or provide such materials.
D. Use of Proceeds. The proceeds from the purchase of the
Company Preferred and Common Stock hereunder and by the Concurrent Purchases
shall be used for general corporate purposes.
E. Negative Covenants. So long as any of the Company Preferred
issued hereunder remains outstanding, the Company shall not, without the prior
written consent of the holders of at least 60% of the then outstanding shares of
Company Preferred:
(i) directly or indirectly declare or pay any
dividends or make any distributions upon any of its capital stock or
other equity securities other than on the Company Preferred pursuant to
the terms of the Certificate of Incorporation, except for dividends
payable in shares of Common Stock issued upon the outstanding shares of
Common Stock in accordance with the terms of the Certificate of
Incorporation;
(ii) directly or indirectly redeem, purchase or
otherwise acquire, or permit any Company Subsidiary to redeem, purchase
or otherwise acquire, any of the Company's or any Company Subsidiary's
capital stock or other equity securities (including, without
limitation, warrants, options and other rights to acquire such capital
stock or other equity securities) other than Company Preferred pursuant
to the terms of the Certificate of Incorporation and purchases pursuant
to Section 5.16 of the Asset Transfer Agreement, dated as of November
23, 1998, between the Company and RCH Holdings, Inc., or directly or
indirectly redeem, purchase or make any payments with respect to any
stock appreciation rights, phantom stock plans or similar rights or
plans, except for repurchases of Common Stock from employees of the
Company and its Subsidiaries upon termination of employment pursuant to
arrangements approved by the Company's board of directors;
(iii) sell, lease or otherwise dispose of, or permit
any Subsidiary to sell, lease or otherwise dispose of, more than 20% of
the consolidated assets of the Company and its Subsidiaries (computed
on the basis of fair market value, as determined by the Company's board
of directors in its reasonable good faith judgment)
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in any transaction or series of related transactions, or sell or
permanently dispose of any of its or any Subsidiary's Intellectual
Property Rights;
(iv) liquidate, dissolve or effect a recapitalization
or reorganization in any form of transaction (including, without
limitation, any reorganization into a limited liability company, a
partnership or any other non-corporate entity which is treated as a
partnership for federal income Tax purposes);
(v) acquire any interest in any company or business
(whether by purchase of assets, purchase of stock, merger or otherwise)
or enter into any joint venture, or permit any Subsidiary to acquire
any interest in any company or business (whether by a purchase of
assets, purchase of stock, merger or otherwise) or enter into any joint
venture, unless such acquisition or joint venture (an "Acquisition")
has received (after full and complete disclosure of all material
information regarding the proposed Acquisition, including capital
budgets, to the Company's board of directors) the approval of the
Company's board of directors;
(vi) enter into, or permit any Subsidiary to enter
into, the ownership, active management or operation of any business
other than those businesses (a) currently conducted by the Company or
conducted by any of the Predecessor Corporations within one (1) year
prior to the Reorganization Transaction, or (b) proposed to be
conducted in the Proxy;
(vii) except for any indebtedness which has been
previously approved pursuant to a Company budget approved by the board
of directors of the Company, create, incur, assume or suffer to exist,
or permit any Subsidiary to create, incur, assume or suffer to exist,
any indebtedness exceeding an aggregate principal amount of $1,000,000
outstanding at any time on a consolidated basis, without obtaining the
approval of the Company's board of directors;
(viii) except for any expenditure which has been
approved by the Company's board of directors in a budget as described
above, authorize or make, or permit any Subsidiary to authorize or
make, any expenditure in any single transaction or any series of
related transactions for $1,000,000 or more during any calendar year
without obtaining the approval of the Company's board of directors;
(ix) fail to maintain in full force and effect with
good and responsible insurance companies adequate insurance covering
risks of such types and in such amounts as are customary for
corporations of similar size engaged in similar lines of business
(including, without limitation, (A) product liability coverage, and (B)
directors and officers liability insurance coverage of at least $10
million per claim (which limit shall not include coverage, if any,
available pursuant to any insurance procured pursuant to Section 4.3 of
the Stockholders' Agreement), or such other amounts determined by the
board of directors of the Company, which policies shall name the
Company as beneficiary thereof), it being agreed and understood that
the procurement of any insurance through the Purchaser, any Concurrent
Purchaser, or any such Person's Affiliate, shall not in and of itself
be deemed to have satisfied this requirement;
(x) except as expressly contemplated by this
Agreement, make any amendment to the Certificate of Incorporation, the
Company's bylaws or file any resolution with the Delaware Secretary of
State containing any provisions, which would
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increase the number of authorized shares of Company Preferred or
adversely affect or otherwise impair the rights or relative preferences
and priorities of the holders of Series A-1 Preferred under this
Agreement, the Certificate of Incorporation, or the Company's bylaws;
(xi) merge or consolidate with any Person or, except
as permitted by Section (v) above, permit any Subsidiary to merge or
consolidate with any Person (other than a wholly-owned Subsidiary),
without the approval of the Company's board of directors;
(xii) enter into, amend, modify or supplement, or
permit any Subsidiary to enter into, amend, modify or supplement, any
agreement, transaction, commitment or arrangement with any of its or
any Subsidiary's officers, directors, employees or Affiliates or with
any individual related by blood, marriage or adoption to any such
individual or with any entity in which any such Person or individual
owns a beneficial interest, except as approved by disinterested
directors after full disclosure;
(xiii) with respect to any employee, fail to use
reasonable efforts to enter into and maintain valid and enforceable
noncompetition, nonsolicitation, nondisclosure, and intellectual
property assignment agreements with such employees in the form(s)
approved by the Company's board of directors, it being agreed and
understood that any such approval by the Company's board of directors
shall not in and of itself, be deemed to have satisfied this
requirement;
(xiv) amend, modify or waive any provision of any
employee stock, stock option or similar agreement or any employment,
non-compete, nonsolicitation, nondisclosure or intellectual property
assignment agreement or fail to enforce the provisions of any employee
stock, stock option or similar agreement or any employment,
non-compete, nondisclosure or intellectual property assignment
agreement or fail to exercise any of its rights or remedies thereunder;
(xv) fail to maintain a Compensation Committee of the
Company's board of directors which committee shall determine
compensation packages for all top level management employees of the
Company and each of its Subsidiaries (for purposes hereof, "top level
management employees" shall mean those persons determined to be top
level management employees by the Company's board of directors);
(xvi) except as expressly contemplated by this
Agreement or by the Concurrent Purchases, authorize, issue or enter
into any agreement providing for the issuance (contingent or otherwise)
of, (a) any notes or debt securities containing equity features
(including, without limitation, any notes or debt securities
convertible into or exchangeable for capital stock or other equity
securities, issued in connection with the issuance of capital stock or
other equity securities or containing profit participation features),
(b) any additional shares of Company Preferred, or (c) any capital
stock or other equity securities (or any securities convertible into or
exchangeable for any capital stock or other equity securities) which in
any case are senior to or on a parity with the Company Preferred with
respect to the payment of dividends, redemptions or distributions upon
liquidation or otherwise;
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(xvii) except as contemplated by this Agreement or
the Stockholders' Agreement, change the authorized size of its board
of directors;
(xviii) increase the number of shares of Common Stock
issuable pursuant to stock option plans or stock ownership plan's above
26,539,513 (as such number is proportionately adjusted for stock
splits, combinations and dividends affecting the Common Stock),
otherwise amend or modify any stock option plan or employee stock
ownership plan established as of or after the Closing, or adopt any new
stock option plan or employee stock ownership plan or issue any shares
of Common Stock to its or its Subsidiaries' employees other than as
contemplated by the Stockholders' Agreement;
(xix) use the proceeds from the sale of the Company
Preferred and Common Stock to the Purchaser and Concurrent Purchasers
other than as provided in Section 3.D above, or as approved by the
board of directors;
(xx) make or permit any Company Subsidiary to make
an assignment for the benefit of creditors or admit in writing its
inability to pay its debts generally as they become due; or petition or
apply to any tribunal for the appointment of a custodian, trustee,
receiver or liquidator of the Company or any Company Subsidiary or of
any substantial part, of the assets of the Company or any Company
Subsidiary, or commence any proceeding (other than a proceeding for the
voluntary liquidation and dissolution of a Company Subsidiary) relating
to the Company or any Company Subsidiary under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or
(xxi) take any action which would adversely alter or
change any of the rights, preferences or privileges of the Series A-1
Preferred or the Series A-2 Preferred.
F. Affirmative Covenants. So long as any shares of the Company
Preferred issued hereunder remain outstanding, the Company shall, and shall
cause each Subsidiary to, unless it has received the prior written consent of
the holders of at least 60% of the then outstanding shares of Company Preferred:
(i) at all times cause to be done all things
necessary to maintain, preserve and renew its corporate existence and
all licenses, authorizations and permits necessary or desirable to the
conduct of its businesses, the failure of which could reasonably be
expected to have a material adverse effect upon the financial
condition, operating results, assets, operations or business prospects
of the Company or Company Subsidiaries;
(ii) maintain and keep its material properties in
reasonably good repair, working order and condition;
(iii) pay and discharge when payable all Taxes,
assessments and governmental charges imposed upon its properties or
upon the income or profits therefrom (in each case before the same
becomes delinquent and before penalties accrue thereon) and all claims
for labor, materials or supplies which if unpaid would by law become a
lien upon any of its property, unless and to the extent that the same
are being contested in good faith and by appropriate proceedings and
adequate reserves
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(as determined in accordance with generally accepted accounting
principles, consistently applied) have been established on its books
with respect thereto;
(iv) comply with all other obligations which it
incurs or succeeds to pursuant to any contract or agreement, whether
oral or written, express or implied, as such obligations become due,
unless and to the extent that (a) the same are being contested in good
faith and by appropriate proceedings, and (b) adequate reserves (as
determined in accordance with generally accepted accounting principles,
consistently applied) have been established on its books with respect
thereto;
(v) comply with all applicable laws, rules and
regulations of all governmental authorities, the violation of which
could reasonably be expected to have a material adverse effect upon the
financial condition, operating results, assets, operations or business
prospects of the Company or Company Subsidiary; and
(vi) maintain proper books of record and account
which present fairly in all material respects its financial condition
and results of operations and make provisions on its financial
statements for all such proper reserves as in each case are required in
accordance with generally accepted accounting principles, consistently
applied.
G. Intellectual Property Rights. The Company shall, and shall
cause each Subsidiary to, possess and maintain all material Intellectual
Property Rights necessary or desirable to the conduct of their respective
businesses and own all right, title and interest in and to, or have a valid
license for, all such Intellectual Property Rights. Without limiting the
generality of the foregoing, as soon as reasonably practicable after the
Closing, the Company will file (i) appropriate recordation of change of name
and/or assignment documents in the U.S. Patent and Trademark Office against each
of the Company's federal trademark applications and registrations and (ii)
appropriate change of name documents with InterNIC with respect to the domain
name "▇▇▇.▇▇▇". Neither the Company nor any Subsidiary shall take any action, or
fail to take any action, which would result in the invalidity, abandonment,
misuse or unenforceability of such Intellectual Property Rights or which would
infringe upon or misappropriate any rights of other Persons.
H. Current Public Information. At all times after the Company
or any Company Subsidiary has filed a registration statement with the Securities
and Exchange Commission pursuant to the requirements of either the Securities
Act or the Securities Exchange Act, the Company or applicable Subsidiary shall
file all reports required to be filed by it under the Securities Act and the
Securities Exchange Act and the rules and regulations adopted by the Securities
and Exchange Commission thereunder and shall take such further action as the
Purchaser may reasonably request, all to the extent required to enable the
Purchaser to sell (subject to any applicable restrictions in the Stockholders'
Agreement) Restricted Securities pursuant to (i) Rule 144 adopted by the
Securities and Exchange Commission under the Securities Act (as such rule may be
amended from time to time) or any similar rule or regulation hereafter adopted
by the Securities and Exchange Commission or (ii) a registration statement on
Form S-2 or S-3 or any similar registration form hereafter adopted by the
Securities and Exchange Commission. Upon request, the Company shall deliver to
or as directed by Purchaser, a written statement as to whether it has complied
with such requirements
I. FIRPTA. The Company's capital stock does not constitute a
United States real property interest as that term is defined in Section
897(c)(1)(A)(ii) of the IRC. The
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preceding representation is based on a determination by the Company that the
Company is not and has not been a United States real property holding
corporation (as that term is defined in Section 897(c)(2) of the IRC) since the
date of its incorporation. The Company acknowledges that Purchaser may be a
foreign entity or have foreign Persons as partners or members and that the
Company may be required to file or cause to be filed in the future with the
Internal Revenue Service certain statements with its United States income Tax
Returns required under Section 1.897-2(h) of the Treasury Regulations. The
Company shall use reasonable efforts consistent with sound business practice to
avoid becoming a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the IRC (it being understood that such standard
shall not preclude the Company from leasing sites and undertaking leasehold
improvements in the ordinary course of business).
So long as the Company is not a "United States real property
holding corporation," the Company shall attach to its income Tax Return each
year a statement informing the IRS of that fact as described in Section
1.897-2(h) (4) of the Treasury Regulations and shall send a copy of such
statement to Purchaser. In addition, upon Purchaser's reasonable request, the
Company shall provide Purchaser with a statement that the Company is or is not a
"United States real property holding corporation" as of the date specified by
the Purchaser (or as of the date of the request if the Purchaser does not
specify a date). The Company shall not inform the Internal Revenue Service of
Purchaser's request for such a statement unless the Company is required to do so
by Section 897 of the IRC or the applicable regulations thereunder or otherwise
by applicable law.
In the event the Company in the future becomes a "United
States real property holding corporation," the Company shall promptly notify
Purchaser in writing of such fact. Thereafter, upon written request from
Purchaser, the Company shall provide information, documentation and assistance
to Purchaser reasonably related to the Company's status as a "United States real
property holding corporation," including but not limited to an affidavit stating
(if true) that the equity interest held by Purchaser is of a class that is
regularly traded (as defined by Sections 1.897-1(n) and 1.897-9T of the Treasury
Regulations) on an established securities market (as defined by Section
1.897-1(m) of the Treasury Regulations).
J. Certain Preemptive Rights. At and after such time as
aggregate equity investments in the Company, including pursuant to this
Agreement and the Concurrent Purchases, in the aggregate, equal or exceed
$60,000,000, and so long as Purchaser owns Common Stock, such Purchaser shall,
in connection with the issuance of additional Company equity securities to
non-employees exclusively for cash in a transaction prior to any Qualifying
Public Offering (as defined in the Certificate of Incorporation) (a "Triggering
Issuance"), have the right to irrevocably subscribe for and purchase from the
Company for cash, additional equity securities of the same kind, in the same
relative proportions, at the same per share price and on such other terms and
conditions identical in all material respects (except for differences necessary
or desirable as a result of the regulatory status of a Purchaser, which
differences will be implemented in as equitable a manner as practicable) as such
equity securities are offered and sold in the Triggering Issuance; provided,
however, that such Purchaser shall only be permitted to make such purchases as
are necessary, after giving effect to (a) the Triggering Issuance, (b)
Purchaser's exercise of this preemptive right, and (c) all concurrent exercises
of similar rights available under this Agreement and under any other agreements,
to maintain such Purchaser's proportionate interest in the Company after such
issuance at the same level as immediately prior thereto. For purposes of this
Section 3.J, "proportionate interest" shall be determined based on the number of
shares of Common Stock purchased and still owned by the relevant Person
(excluding Preferred Stock and Common Stock issued upon conversion of
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Company Preferred, and treating any shares of Common Stock sold by such Person
as shares issued upon conversion, to the extent that such person has converted
Company Preferred). Upon the revocable determination by the Company's board to
issue additional equity securities under circumstances creating these rights,
the board shall determine whether purchases pursuant to this Section 3.J shall
(a) commensurately reduce issuances pursuant to the Triggering Issuance, (b) be
offered in addition to issuances pursuant to the Triggering Issuance, or (c) be
accomplished by some combination of clauses (a) and (b) above, and, thereafter,
the board shall promptly notify each party to an Investment Agreement or any
such other agreement giving rise to such right and work in good faith to
expeditiously implement these rights.
K. Authorized and Reserved Common Stock and Company Preferred.
The Company agrees to take and to cause to be taken all action necessary to
assure that a sufficient quantity of Series A-1 Preferred and Series A-2
Preferred is timely authorized and reserved for issuance as dividends on
outstanding Company Preferred and to assure that a sufficient quantity of Common
Stock is timely authorized and reserved for issuance to accommodate conversion
of Company Preferred (including Company Preferred issued in the future and
issued as dividends on Company Preferred). All such shares of Common Stock and
Company Preferred so issuable will, after being issued, be duly and validly
issued, fully paid and nonassessable and free of all Taxes, liens and charges.
The Company shall take all action as may be necessary to assure that all such
shares of Company Preferred and Common Stock may be so issued without violation
of any laws or governmental regulations.
L. Designation of Directors. The Company shall use its best
efforts to cause any directors designated by the Purchaser as provided in the
Stockholders' Agreement to be elected to the board of directors of the Company,
in accordance with the terms of the Stockholders' Agreement.
SECTION 4. TRANSFER OF RESTRICTED SECURITIES.
A. General Provisions. Restricted Securities are transferable
only pursuant to (i) public offerings registered under the Securities Act, (ii)
Rule 144 or Rule 144A of the Securities and Exchange Commission (or any similar
rule or rules then in force) if such rule is available and (iii) subject to the,
Stockholders' Agreement, any other legally available means of transfer.
B. Rule 144A. Upon the request of Purchaser, the Company shall
promptly supply to Purchaser or its prospective transferees all information
regarding the Company required to be delivered in connection with a transfer
pursuant to Rule 144A of the Securities and Exchange Commission.
C. Legend Removal. In connection with the transfer of any
Restricted Securities (other than a transfer described in Section 4.A.(i) or
(ii) above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of counsel which (to the Company's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that such transfer of
Restricted Securities may be effected without registration of such Restricted
Securities under the Securities Act. In addition, if the holder of the
Restricted Securities delivers to the Company an opinion of counsel that no
subsequent transfer of such Restricted Securities shall require registration
under the Securities Act, the Company shall promptly upon such contemplated
transfer deliver new certificates for such Restricted Securities which do not
bear the Securities Act legend set forth in Section 4.1 of the Stockholders'
Agreement under the caption "First
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Legend". If the Company is not required to deliver new certificates for such
Restricted Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to the Company
in writing its agreement to be bound by the conditions contained in this Section
4 and Section 4.1 of the Stockholders' Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to the Purchaser to enter into this Agreement and purchase
the Series A-1 Preferred and the Common Stock hereunder, the Company hereby
represents and warrants that:
A. Organization and Corporate Power. Each of the Company and
the Company Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is qualified to do
business in every jurisdiction in which the ownership of its property or conduct
of business requires it to qualify. The Company possesses all requisite power
and authority and all material licenses, permits and authorizations necessary to
own and operate its properties, to carry on its business as now conducted and
presently proposed to be conducted and to carry out the transactions
contemplated by this Agreement. The copies of the Certificate of Incorporation
and Bylaws of each of the Company and the company Subsidiary which have been
furnished to the Purchaser are current, correct, complete and in full force and
effect.
B. Capital Stock and Related Matters.
(i) As of the Closing and immediately thereafter
(giving effect to the Concurrent Purchases), the authorized capital stock of the
Company shall consist of (a) seven hundred fifty (750) shares of Series A-1
Preferred, fifty one (51) of which shall be issued and outstanding at the
Closing), (b) two hundred fifty (250) shares of Series A-2 Preferred, fifteen
(15) of which shall be issued and outstanding at the Closing, and (c) one
billion (1,000,000,000) shares of Common Stock, of which four hundred two
million, four hundred sixty seven thousand, three hundred and thirty nine
(402,467,339) shares shall be issued and outstanding as of the Closing. Up to
ten million five hundred fifty thousand (10,550,000) shares of Common Stock
shall be reserved for issuance to a Chief Operating Officer, Chief Technology
Officer, General Counsel and Vice President of Information Technology, which
positions the Company is presently seeking to fill. As of the Closing, except
pursuant to the Transaction Documents, neither the Company nor the Company
Subsidiary will have outstanding any stock or securities convertible or
exchangeable for any shares of its capital stock or containing any profit
participation features, nor shall it have outstanding any rights or options to
subscribe for or to purchase its capital stock or any stock or securities
convertible into or exchangeable for its capital stock or any stock appreciation
rights or phantom stock plans. The attached Capitalization Schedule accurately
sets forth the following information, both before and after the Closing
hereunder and under the Concurrent Purchases, with respect to all outstanding
Company securities and rights to acquire the Company's capital stock: the
holder, the number of shares covered, and the status of such security as
restricted or unrestricted stock. As of the Closing, all of the outstanding
shares of the Company's capital stock shall be validly issued, fully paid and
nonassessable.
(ii) Except pursuant to the Transaction Documents,
there are no statutory or, contractual stockholders preemptive rights or rights
of refusal with respect to the issuance of the Series A-1 Preferred, the Series
A-2 Preferred or the Common Stock hereunder or the issuance of the Common Stock
upon conversion of the Company Preferred. The Company has not violated any
applicable federal or state securities laws in connection with the
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offer, sale or issuance of any of its capital stock, and, assuming that the
Purchaser's representations in Section 7.C are true and correct, the offer, sale
and issuance of the Company Preferred and the Common Stock hereunder and upon
conversion of the Company Preferred, and the issuance and distribution of Common
Stock in connection with the Reorganization Transactions do not require
registration under the Securities Act or any applicable state securities laws.
To the best of the Company's knowledge, there are no other agreements between
the Company's stockholders with respect to the voting or transfer of the
Company's capital stock or with respect to any other material aspect of the
Company's affairs, except for the Stockholders' Agreement.
C. Subsidiaries. The Company and New ARC (which is wholly
owned by the Company), were, as of the Effective Date, newly formed, solely for
purposes of the transactions contemplated by the Transaction Documents. Neither
the Company nor New ARC has, or has had, any ownership interest in any other
Person (other than the Company's ownership of all of the equity securities of
New ARC).
D. Authorization; No Breach. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby to
which the Company or Company Subsidiary is a party have been duly authorized by
the board of directors and shareholders of the Company. This Agreement and all
other agreements contemplated hereby to which the Company or Company Subsidiary
is a party each constitutes a valid and binding obligation of the Company or
Company Subsidiary, enforceable in accordance with its terms. The execution and
delivery by the Company of this Agreement and all other agreements contemplated
hereby to which the Company and/or Company Subsidiary is a party, the offering,
sale and issuance of the Company Preferred and Common Stock hereunder, in
connection with the Reorganization Transactions and in connection with the
Concurrent Purchases, as well as the issuance of the Common Stock upon
conversion of the Company Preferred, the adoption of the Certificate of
Incorporation and the Company's bylaws and the fulfillment of and compliance
with the respective terms hereof and thereof by the Company, do not and will not
(i) conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) result in the creation of any lien,
security interest, charge or encumbrance upon the Company's or Company
Subsidiary's capital stock or assets pursuant to, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval, exemption or
other action by or notice to any court or administrative or governmental body or
agency pursuant to, the charter or bylaws of the Company or Company Subsidiary,
or any law, statute, rule or regulation to which the Company or Company
Subsidiary is subject, or any agreement, instrument, order, judgment or decree
to which the Company or Company Subsidiary is subject.
E. Assets. As a result of the Reorganization Transactions, the
Company and Company Subsidiary have good and marketable title to, or a valid
leasehold interest in, the properties and assets used by RCH Holdings Inc. and
the Predecessor Corporations immediately prior to the Reorganization, subject
only to liens in favor of S.Z. Investments, L.L.C. (which existed immediately
prior to the Effective Date but were released subsequent thereto), liens for
current property Taxes not yet due and payable, and liens immaterial to the
conduct of business of the Company and Company Subsidiary as described in the
Proxy.
F. Other Representations, Warranties, Covenants and
Deliveries. The Company hereby (a) restates to and for the benefit of Purchaser
each representation, warranty and covenant of RCH Holdings, Inc. and the Company
set forth in the Asset Transfer Agreement (including with respect to the
delivery of documents) as though represented,
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warranted, covenanted, and delivered by the Company to Purchaser at and as of
the Effective Date, and (b) represents and warrants to the Purchaser that this
Agreement is identical in all material respects in form and substance to each of
the Investment Agreements with the Company entered into (i) concurrently
herewith, and (ii) on the Effective Date, except with respect to matters
identified on Exhibit L.
G. Closing Date. The representations and warranties of the
Company contained in this Section 5 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
writing delivered by, or on behalf of, the Company to Purchaser shall be true
and correct in all respects on the date of the Closing as though then made,
except as affected by the transactions expressly contemplated by this Agreement
and the Concurrent Purchases and except that representations made as of another
specific date need only be true and correct as of the date made.
SECTION 6. DEFINITIONS.
A. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Asset Transfer Agreement" means the Asset Transfer Agreement,
dated November 17, 1998, between RCH Holdings, Inc and the Company.
"Concurrent Purchases" means the transactions contemplated by
the Concurrent Purchasers pursuant to agreements substantially in the form of
this Investment Agreement.
"Current Modification Documents" means the documents attached
hereto as Exhibit K.
"EOPT Agreements" means the agreements granting the Company
and Company Subsidiary the right to install the Company's network architecture
in not less than 40 office properties owned or managed by Equity Office
Properties Trust or Affiliates thereof, including the related parent guarantee.
"Former Subsidiaries" means Allied Riser Communications, Inc.
(F/K/A RiserCorp, Inc.) and DPI Technology Resources, Inc.
"Indemnification Agreement" means the Indemnification
Agreement, dated November 23, 1998, among the Company, EGI-ARC Investors, Inc.,
Telecom Partners II, L.P., Crescendo World Fund, LLC, Eagles Ventures WF, LLC,
Crescendo III, L.P., ▇▇▇▇▇▇▇▇ Equity Group, LLC and the other parties thereto,
in the form attached hereto as Exhibit E, as amended from time to time, as
modified by the Current Modification Documents.
"Intellectual Property Rights" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of
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the goodwill (if any) associated therewith, (iii) copyrights (registered or
unregistered) and copyrightable works and registrations and applications for
registration thereof, (iv) mask works and registrations and applications for
registration thereof, (v) computer software, data, data bases and documentation
thereof, (vi) trade secrets and other confidential information (including,
without limitation, ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial and marketing plans and customer and
supplier lists and information), (vii) other intellectual property rights and
(viii) copies and tangible embodiments thereof (in whatever form or medium).
"IRC" means the Internal Revenue Code of 1986, as amended, and
any reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"Liquidation Documents" means the Plan of Liquidation relating
to the liquidation of the Former Subsidiaries into RCH Holdings, Inc., all as
described in the Asset Transfer Agreement, and including all documents and
transactions related thereto.
"Officers' Certificate" means a certificate signed by each of
the Company's President, Chief Financial Officer, and Vice President of Finance
stating that (i) the officers signing such certificate have each made or have
caused to be made such investigations as are necessary in order to permit him to
verify the accuracy of the information set forth in such certificate and (ii) to
the best of such officer's knowledge, after due inquiry, such certificate does
not misstate any material fact and does not omit to state any fact necessary to
make the certificate not misleading.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Predecessor Corporations" means each of RCH Holdings, Inc.,
Allied Riser Communications, Inc. (f/k/a RiserCorp., Inc.), Carrier Direct,
Inc., DPI Technology Resources, Inc., Digital Packet Interface Solutions, Inc.
and each of their respective predecessors.
"Reorganization" and "Reorganization Transactions" means the
Reorganization Transaction as defined in the Indemnification Agreement,
excluding only the purchase and sale by Purchaser contemplated by this Agreement
and by the Agreements attached hereto as Exhibit L.
"Restricted Securities" means (i) the Company Preferred and
Common Stock issued hereunder and to the Concurrent Purchasers, (ii) the Common
Stock issued upon conversion of Company Preferred, and (iii) any securities
issued with respect to the securities referred to in clauses (i), (ii) or (iii)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) been distributed to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become eligible for sale pursuant to
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24
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth as the "First Legend" in Section 4.1 of the
Stockholders' Agreement have been delivered in accordance therewith
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"Securities and Exchange Commission" includes any governmental
body or agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"Stockholders' Agreement" means the Stockholders' Agreement
among the Company, EGI-ARC Investors, Inc., Telecom Partners II, L.P., and the
other parties thereto, as modified by the Current Modification Documents.
"Stockholders' Pledge Agreement" means the Stockholders'
Pledge Agreement among the Company, EGI-ARC Investors, L.L.C. (as collateral
agent and in its individual capacity), and the other parties thereto.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.
"Tax" or "Taxes" means federal, state, county, local, foreign
or other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other Taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to Tax, and interest attributable
thereto) whether disputed or not.
"Tax Return" means any return, information report or filing
with respect to Taxes, including any schedules attached thereto and including
any amendment thereof.
"Transaction Documents" means the Asset Transfer Agreement and
each document referred to on Exhibit A thereto, in each case, as modified by the
Current Modification Documents.
20
25
SECTION 7. MISCELLANEOUS.
A. Expenses. The Company agrees to pay on demand as
reimbursement to Purchaser, (i) the out-of-pocket travel and similar expenses of
Purchaser's employees and Affiliates arising in connection with the due
diligence and negotiation, documentation and execution of this Agreement and the
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby, (ii) the fees and expenses of counsel to Purchaser, arising
in connection with the negotiation, documentation and execution of this
Agreement and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby (which fees and expenses identified in clause
(i) above and in this clause (ii) shall not exceed $30,000.00 in the aggregate),
(iii) the reasonable fees and expenses incurred with respect to any amendments
or waivers (whether or not the same become effective) under or in respect of
this Agreement and the Transaction Documents, the other agreements contemplated
hereby or in the Certificate of Incorporation (including, without limitation, in
connection with any proposed merger, sale or recapitalization of the Company or
Subsidiary), (iv) stamp and other Taxes which may be payable in respect of the
execution and delivery of this Agreement or the issuance, delivery or
acquisition of any shares of capital stock issued or issuable hereunder (whether
at the Closing or thereafter), (v) the reasonable fees and expenses incurred
with respect to the successful enforcement of the rights granted under this
Agreement, the agreements contemplated hereby, or the Certificate of
Incorporation and other Transaction Documents, and (vi) the reasonable fees and
expenses incurred by Purchaser or its Affiliates in any filing with any
governmental agency with respect to its investment in the Company or in any
other filing with any governmental agency with respect to the Company which
mentions such Person (it being understood that such expense provision shall not
apply to any SEC filings made by the Purchaser in the ordinary course as a
result of holding any publicly traded securities in the Company); including,
without limitation, any filings at any time while such Person owns Company
Preferred or Common Stock, required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvement Act.
B. Remedies. The Purchaser shall have all rights and remedies
set forth in this Agreement, the Certificate of Incorporation and all rights and
remedies which such holder has been or is subsequently granted at any time under
any other agreement or contract and all of the rights which such holder has
under any law. Any Person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. The
Company agrees to indemnify and hold the Purchaser, its officers, partners and
Affiliates harmless against any loss, liability, damage or expense (including
reasonable legal fees and costs) which such Purchaser may suffer, sustain or
become subject to as a result of or in connection with the breach by the Company
of any representation, warranty, covenant or agreement of the Company contained
in this Agreement, the Certificate of Incorporation or the Transaction
Documents.
C. Purchaser Representations. Purchaser hereby represents and
warrants that (i) (A) such Purchaser is duly organized and (B) such Purchaser's
execution, delivery and performance of this Agreement has been duly authorized
by all necessary partnership action required on the part of Purchaser, (ii)
Purchaser's execution, delivery and performance of this Agreement will not, in
any material respect, breach or conflict with or cause a default under, any
applicable law or other agreement or instrument to which Purchaser is a party or
by which it is bound, (iii) it has full power and authority to execute, deliver
and perform this Agreement and to purchase the Company Preferred and Common
Stock to be purchased by Purchaser
21
26
hereunder, (iv) this Agreement constitutes the valid and legally binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, (v) it is acquiring the Restricted Securities purchased hereunder or
acquired pursuant hereto for its own account with the present intention of
holding such securities for purposes of investment, and that it has no intention
of selling such securities in a public distribution in violation of the federal
securities laws or any applicable state securities laws, provided that nothing
contained herein shall prevent the Purchaser and subsequent holders of
Restricted Securities from transferring such securities in compliance with the
provisions of Section 4 hereof, (vi) its financial condition is such that such
Purchaser is able to bear the risk of holding the Company Preferred and Common
Stock to be received by Purchaser for an indefinite period of time, (vii) it has
such knowledge and experience in financial and business matters and in making
investments of this type and that Purchaser is capable of evaluating the merits
and risks of purchasing the Company Preferred and the Common Stock, (viii) it
has been provided access to such information and documents of the Company as
such Purchaser has requested and has been afforded an opportunity to ask
questions of and receive answers from representatives of the Company concerning
the terms and conditions of this Agreement and the purchase of the Company
Preferred and the Common Stock and (ix) it is an "accredited investor" within
the meaning of such term set forth in Rule 501(a) of the Securities Act for the
Company Preferred and Common Stock being purchased hereby.
D. Consent to Amendments. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the holders of at least 75% of the then outstanding shares of Company
Preferred and all current and future holders of Company Preferred and Common
Stock shall be bound by such written consents; provided, however, that no such
amendment shall treat the Purchaser or the Purchaser's rights with respect to
the Company, differently in any material respect than the holders of Company
Preferred executing such written consent, without the written consent of the
Purchaser. No other course of dealing between the Company and the holder of
Company Preferred, or any delay in exercising any rights hereunder or under the
Certificate of Incorporation shall operate as a waiver of any rights of any such
holders. For purposes of this Agreement, shares of Company Preferred held by the
Company or any Subsidiaries shall not be deemed to be outstanding.
E. Survival of Representations and Warranties; Schedules and
Exhibits. All representations and warranties contained or incorporated herein or
made in writing by any party in connection herewith shall survive the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, regardless of any investigation made by Purchaser or on its
behalf and even if the Purchaser knows or had reason to know of any such
misrepresentation or breach of warranty or covenant as of the Closing. Nothing
in the Schedules or Exhibits hereto or incorporated herein, shall be deemed
adequate to disclose an exception to a representation or warranty made herein or
therein, unless such Schedule or Exhibit identifies the exception with
particularity and describes the relevant facts in detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein or in such incorporated materials
(unless the representation or warranty has to do the with existence of the
document or other item itself).
F. Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of either of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the
22
27
parties hereto whether so expressed or not. In addition, and whether or not any
express assignment has been made, the provisions of this Agreement which are for
the Purchaser's benefit as a purchaser or holder of Company Preferred, and/or
Common Stock are also for the benefit of, and enforceable by, any subsequent
holder of such Company Preferred and/or such Common Stock.
G. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
H. Counterparts. This Agreement may be executed simultaneously
in one or more counterparts (either or both of which may be by facsimile), any
one of which need not contain the signatures of both parties, but both such
counterparts taken together shall constitute one and the same Agreement. At any
time after the date hereof, any Person purchasing Company Preferred will be
required to execute an agreement similar to the Stockholders' Agreement and
agreeing to be bound by the terms and conditions of such Agreement.
I. Descriptive Headings; Interpretation. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. The use of the word "including"
in this Agreement shall be by way of example rather than by limitation.
J. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION OTHER THAN THE STATE
OF DELAWARE.
K. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given or the date delivered when
delivered personally to the recipient, and on the business day following the
date of transmission, when sent to the recipient by reputable overnight courier
service (charges prepaid) and on the business day following the date of
transmission, when sent to the recipient by facsimile transmission (confirmed by
the facsimile operator). Such notices, demands and other communications shall be
sent to Purchaser and each Concurrent Purchaser at the address and/or facsimile
number indicated on the Schedule of Purchasers and to the Company at the address
and/or facsimile number indicated below:
Allied Riser Communications Holdings, Inc.
▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with a copy to:
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28
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address and/or facsimile number or to the attention of such
other person as the recipient party has specified by prior written notice to the
sending party.
L. Understanding Among the Purchasers. The determination of
the Purchaser to purchase the Company Preferred and Common Stock pursuant to
this Agreement has been made by such Purchaser independent of any other
Purchaser or prior purchaser and independent of any statements or opinions as to
the advisability of such purchase or as to the properties, business, prospects
or condition (financial or otherwise) of the Company, New ARC, or any
predecessor which may have been made or given by any Concurrent Purchaser or
prior purchaser or by any agent or employee of any Concurrent Purchaser or prior
purchaser. In addition, it is acknowledged by the Purchaser that no other
Concurrent Purchaser or prior purchaser has acted as an agent of the Purchaser
in connection with making its investment hereunder and that no such Person shall
be acting as an agent of such Purchaser in connection with monitoring its
investment hereunder.
M. Integration. This Agreement, together with the Transaction
Documents, constitutes the entire agreement between the Company and the
Purchaser with respect to the subject matter covered hereby and thereby and
supersedes all prior or contemporaneous oral or written agreements, arrangements
or understandings.
N. Capital and Surplus; Special Reserves. The Company agrees
that the capital of the Company (as such term is used in Section 154 of the
General Corporation Law of Delaware) in respect of the Company Preferred issued
pursuant to this Agreement and the Concurrent Purchases shall be equal to the
aggregate initial liquidation value of such shares and that it shall not
increase the capital of the Company with respect to any shares of the Company's
capital stock at any time on or after the date of this Agreement. The Company
also agrees that it shall not create any special reserves under Section 171 of
the General Corporation Law of Delaware without the prior written consent of the
holders of at least 60% of the then outstanding shares of Company Preferred.
O. Treatment of Company Preferred. The Company covenants and
agrees that so long as federal income Tax laws prohibit a deduction for
distributions made by the Company with respect to preferred stock (i) it shall
treat all distributions paid by it on the Company Preferred as non-deductible
dividends on all of its Tax Returns and (ii) it shall treat the Company
Preferred as preferred stock in all of its financial statements and other
reports and shall treat all distributions paid by it on the Company Preferred as
dividends on preferred stock in such statements and reports.
* * * * * * * *
24
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IN WITNESS WHEREOF, the parties hereto have executed this
Series A -1 Preferred Stock Investment Agreement on the date first written
above.
25
30
EXHIBIT A
CONCURRENT PURCHASES
Shares of
Shares of Series Series A-2 Shares of
A-1 Preferred Preferred Common Stock Total
Purchased at Purchased at Purchased at Purchase
Purchaser Closing Closing Closing Price
TELECOM PARTNERS II, L.P. 2 0 $2,000,000
8,749,290 $874.93
CRESCENDO WORLD FUND, LLC .9543 0 $954,300
4,174,724 $417.48
EAGLE VENTURES WF, LLC .0457 0 $45,700
199,921 $20.00
CRESCENDO III, L.P. 4 0 $4,000,000
17,498,580 $1,749.86
ANDA PARTNERSHIP 3 0 $3,000,000
13,123,935 $1,312.40
NORWEST VENTURE PARTNERS VII, 15 0 $15,000,000
L.P.
65,619,675 $6,561.97
31
Addresses:
1. Norwest Venture Partners VII, L.P.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Slap
2. Telecom Partners II, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
Holland & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
3. Crescendo World Fund, LLC,
Eagle Ventures WF, LLC, and
Crescendo III, L.P.
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇.▇.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
32
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Tower
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
4. ANDA Partnership
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
33
Schedule of Other 1998 Investment Agreements
1. Investment Agreement, dated as of December 30, 1998, by and between ARC and
EGI-ARC Investors, L.L.C.
2. Investment Agreement, dated as of December 30, 1998, by and between ARC and
Telecom Partners II, L.P.
3. Investment Agreement, dated as of December 30, 1998, by and between ARC and
Crescendo World Fund, LLC
4. Investment Agreement, dated as of December 30, 1998, by and between ARC and
Eagle Ventures WF, LLC
5. Investment Agreement, dated as of December 30, 1998, by and between ARC and
Crescendo III, L.P.
6. Investment Agreement, dated as of December 30, 1998, by and between ARC and
▇▇▇▇▇▇▇▇ Equity Group, L.L.C.
7. Investment Agreement, dated as of December 30, 1998, by and between ARC and
ANDA Partnership
